The Supreme Court is punting on a key question about when Medicaid providers and beneficiaries have the right to sue over cuts to the federal-state health care program.

That was the major question at the heart of Douglas v. Independent Living Center, in which provider and consumer groups claimed that California violated federal law by cutting Medicaid provider payment rates. They went to court under the Constitution’s Supremacy Clause, essentially saying that provisions of the federal Medicaid statute should block the provider cuts.

But on Wednesday, the Supreme Court ruled that actions taken since the case was filed made the Supremacy Clause question moot and sent it back to the 9th Circuit Court of Appeals.

Since the case was filed, CMS approved some elements of California’s proposed rate changes, and California withdrew others being challenged in this case.

“All parties agree that the agency’s approval of the enjoined rate reductions does not make these cases moot,” according to the opinion written by Justice Stephen Breyer, who was joined by Justices Anthony Kennedy, Ruth Bader Ginsburg, Sonia Sotomayor and Elena Kagan.

But even though the lawsuit itself is still valid, the Supremacy Clause is not the right way to challenge the California rate cuts, according to the opinion.

CMS’s actions on California Medicaid rates don’t change the “underlying substantive question” of whether the cuts are consistent with federal law, Breyer wrote. But the providers and beneficiaries may have to change their legal strategy.

Those groups argued that they had rights under the Supremacy Clause to bring the suit, but the Supreme Court dodged that question altogether. Instead, Breyer wrote they may have to seek review of the agency determination under the Administrative Procedure Act.

J. Lester Feder contributed to this report.

This article first appeared on POLITICO Pro at 11:14 a.m. on February 22, 2012.